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AT&T and T-Mobile withdraw FCC merger filings, as $4bn is set aside for breakup fee

North American carriers AT&T and T-Mobile USA have withdrawn their filings to the US Federal Communications Commission (FCC) regarding their proposed merger.

AT&T has admitted that it has set aside $4bn to cover a potential charge to cover the breakup fee and cost of assets to be paid to T-Mobile parent Deutsche Telekom if the merger deal falls through

AT&T said that it has set aside $4bn to cover a potential charge to cover the breakup fee and cost of assets to be paid to T-Mobile parent Deutsche Telekom if the merger deal falls through, according to the Wall Street Journal.

The firms said they would continue to pursue the $39bn merger “as soon as is practical”, despite opposition from the US Department of Justice.

Earlier this week FCC Chairman Julius Genachowski said that letting AT&T acquire T-Mobile USA is “not in the public interest” and that if approved, “thousands of jobs will be lost in the aftermath”.

He had therefore proposed an administrative hearing take place, which would have required AT&T to present its case before an administrative law judge. The FCC would also present its own findings at the hearing.

“I think rather than going through the FCC first, the two companies are trying to work through the Department of Justice, and get things smoothed out there first,” said Sylvain Fabre, research director in the carrier network infrastructure group at Gartner. “However, they’re already planning for the $4bn charge but nothing’s certain until it’s over.”

“No matter what happens, Deutsche Telekom will walk away with something rather than nothing, which can’t be said for AT&T.”

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